BANCASSURANCE

WHAT IS BANCASSURANCE?

 Distribution of insurance products through a bank’s distribution

channels.
 According to IRDA, ‘bancassurance’ refers to banks acting as
corporate agents for insurers to distribute insurance products
 Life Insurance Marketing and Research Association’s
insurance dictionary defines bancassurance as “the provision
of life insurance services by banking and building societies”.
 It is basically selling insurance products and services by leveraging
the vast customer base of a bank and fulfills the banking and
insurance needs of the customers at the same time.
BANCASSURANCE - HISTORY
 Originated in France in 1980s

 Spread rapidly across Europe

 Introduced in India in 1999

⚫ Opening up of insurance industry
⚫ 20 new companies
BANCASSURANCE IN INDIA
 In the year 2002 the banks of India were permitted
to do insurance business for the first time.
 It is regulated by both RBI and
IRDA as it is combination of bank and
insurance.
 It is a Win-Win Strategy

 Example: SBI Life Insurance Company Ltd has tie

up with SBI.
 RBI GUIDELINE FOR BANKS ENTERING INTO
INSURANCE SECTOR :
 Joint venture will be allowed for financially strong
banks wishing to undertake insurance business
with risk participation;
 For banks which are not eligible for this joint-
venture option, an investment option of up to 10 %
of the net worth of the bank or Rs. 50 crore,
whichever is lower, is available.
 Any commercial bank will be allowed to undertake
insure business as agent of insurance companies.
This will be on a fee basis with no-risk participation.
THE INSURANCE REGULATORY AND DEVELOPMENT
AUTHORITY (IRDA) GUIDELINES FOR THE
BANCASSURANCE ARE:
Each bank that sells insurance must have a chief
insurance executive to handle all the insurance
activities;
All the people involved in selling should under-go
mandatory training at an institute accredited by IRDA
and pass the examination conducted by the authority;
Commercial banks may become corporate agents
for one insurance company
Banks cannot become insurance brokers.
 JOINT
VENTURES
SBI Life Insurance Company Limited
Joint venture between the State Bank of India and BNP
Paribas Assurance registered with IRDA on 30.03.2001
Share Holdings
1. State Bank of India ---
2. BNP Paribas 74%
Assurance ---
26%.
 CANARA HSBC ORIENTAL BANK OF
COMMERCE LIFE INSURANCE
COMPANY LIMITED, REG. ON 6TH OF
JUNE, 2008
1. Canara Bank Share Holdings - 51%
2. HSBC Insurance
(Asia Pacific) Holdings Ltd -
26%
3. Oriental Bank of Commerce - 23%
 SOME OTHER TIE UPS
Insurance Company
ARE : Bank

Corporation Bank, Indian Overseas

Bank, Centurion Bank, Vijaya Bank,
Life Insurance Corporation of India Oriental Bank of Commerce etc

National Insurance Co. Ltd. City Union Bank

United India Insurance Co. Ltd South Indian Bank

Bajaj Allianz General Insurance Co.
Ltd
ICICI Prudential Life Insurance Co
Ltd.
Karur Vysya Bank and Lord Krishna
Bank
ICICI Bank, Bank of India, Citibank,
Federal Bank, and Punjab and
Maharashtra Co-operative Bank.

HDFC Standard Life Union Bank of India

BANCASSURANCE SALES MODELS
 Separate Sales Force
Minimum integration between the staff of the partners and
merely utilize the customer database for insurance
product prospecting.
 Hand in Glove

⚫ Sales force of the insurer utilizing the resources of

the bank (customer base, brand infrastructure , bank
staff expertise).
⚫ Bank staff sells simply package product, but act as
introducers & in the case of more complex products
the insurer’s financial planner undertake the
constructive selling process and final lead closure.
⚫ High interaction between the bank and insurer’s staff.
 Fully Integrated
⚫ Insurance sales process is wholly owned
by the bank staff while the insurer acts
only as a product and service provider.
⚫ Exploitation of bank’s strength and does
not utilize the skills of the insurer.
DIFFERENT BANCASSURANCE MODELS
Integrat
ed

Ban Insur
k er

Agent
s
•Agents to place
at bank branches •No agent
Non - at
integrat •Mine on bank’s branches
client base - • Bank’s RMs to
ed
telemarketing sell

Ban Insur Ban Insur

k er k er

Broker
’s Partnership - Leads
model referral from bank on
commercial business;
brokers to recommend
Ban business Brok
k er
 BANCASSURANCE
- DISTRIBUTION CHANNELS
 Career Agents
 Special Advisers
 Salaried Agents
 Bank Employees / Platform Banking
 Corporate Agencies and Brokerage Firms
 Direct Response
 Internet
 e-Brokerage
 Outside Lead Generating Techniques
MICRO-INSURANCE
 Micro-insurance, the term used to refer to
insurance to the low-income people.
 It is mandatory for all formal insurance
companies to extend their activities to rural and
well-identified social sector in the country (IRDA
2000).
 Tata AIG Life - First insurance company to
launch Micro-Insurance Scheme.
ADVANTAGE FOR THE BANKS
 Revenue diversification
 Satisfaction of more financial needs under the
same roof
 Customer retention-Increase in customer loyalty

 More profitable resource utilization

 Enriched work environment

 Establish sales oriented culture

ADVANTAGE FOR THE INSURANCE
COMPANIES
 Revenue and channel diversification
 Quality customer access

 Quicker geographical reach creation of brand equity

 Increase in volume and profit

 Improved brand equity

 Some others
Immediate access to New
Markets

Improve sales
Increase in Market
effectiveness & after sales
Penetration
service

Insurer

Reduce reliance on
Develop new financial traditional distribution
products more efficiently channel

Combine Cost Saving &

Increased Profitability
ADVANTAGE FOR THE CONSUMER
 Enhanced convenience
 One stop shopping for all financial services

 Innovative and better product ranges

 More credible solution

 SWOT
ANALYSIS
STRENGTH:
Vast untapped market

Huge pool of skilled professionals

WEAKNESS:
Lack of networking among bank branches

Saving Ability of Middle Class

OPPORTUNITY:
Data mining :Banks have a huge customer
database which has to be properly leveraged. Target
segments should be identified and tapped.
Wide distribution networks of banks

THREATS:
Human Resource Challenges

Non-response from the target groups can also pose

a challenge.
 CONCLUSION
 For bank it just act as a means product
of
diversification and additional fee income
 For insurance it act as a tool for increasing
their market penetration and premium turnover

 For customer it benefit them as in term of reduced

price, high quality products and delivery doorsteps

 SO EVERYBODY IS WINNER HERE